ANDREW A. DUFFY
sa国际传媒
Greater Victoria鈥檚 office vacancy rate has dropped close to a 10-year low and could slip lower despite the addition of new office buildings in the region according to a new report to be released this weekend.
Colliers International鈥檚 third-quarter office market report shows the region鈥檚 vacancy rate has dropped to five per cent from 5.8 per cent in the last three months, and down from 8.2 per cent in the first half of 2018.
Colliers vice-president Tristan Spark said the last time the vacancy rate was that low was in 2009, when it hit 4.5 per cent.
鈥淚t鈥檚 exciting, but a little frightening,鈥� Spark said. 鈥淲e are running out of space, even with the new space coming on the market.鈥�
The report pointed out nearly 80,000 square feet of space 鈥� 20,000 of it downtown 鈥� was absorbed by the market in the third quarter.
鈥淭here鈥檚 a new driver in the economy that we haven鈥檛 had in the last 16 years ... it鈥檚 the [provincial] NDP and they are out there leasing space,鈥� said Spark.
The government has plans to absorb existing office space to accommodate new agencies and house new services such as labs to study the effects of climate change, and to house the bureaucracy behind cannabis, said Spark.
鈥淎ll these government [decisions] have consequences and the new programs need office space,鈥� said Spark. 鈥淎t the same time, the private sector has continued to be a driver. The high-tech sector, for example, has been steady and is still leasing up space. In general, things are going really well and everyone seems busy.鈥�
Spark said what has caught them by surprise is the fact vacancy rates continued to drop in the face of the addition of 234,000 square feet of space downtown 鈥� 50,000 square feet at 1515 Douglas St. and 184,000 at 750 Pandora Ave. 鈥� as well as another 240,000 in James Bay in the two phases of Capital Park.
鈥淸At the end of 2017] I mistakenly predicted, when the vacancy rate was 8.7 per cent, that it would go to 9.9 per cent when 750 Pandora and 1515 Douglas came on stream. I was wrong,鈥� Spark said. 鈥淚t went down to 8.1.鈥�
He said the province took over the entire building at 750 Pandora and the private sector ate up 1515 Douglas and the spaces those businesses and government departments left behind were devoured by expanding smaller businesses.
鈥淕enerally this has been fueled by an expansion of things,鈥� Spark said.
Spark said even new spaces not quite ready for occupancy, such as the second phase of Capital Park and about 35,000 square feet at 1235 Esquimalt Rd. (Esquimalt Town Centre), are either spoken for or soon will be.
Tenants looking for office space are already beginning to suffer from a lack of options and office rental rates are experiencing upward pressure, he said.
The average rental price per square foot around the region is $27.50, according to the report, an increase of 7.8 per cent compared to last year at this time.
Spark said overall the indication is the office market is healthy, despite the drop in vacancy rates.
鈥淚 think we now have developers responding to the need, which I felt we didn鈥檛 have in the past,鈥� he said. 鈥淚 feel we won鈥檛 get as deep into the hole this time.鈥�
Spark said some of that future development will be on the West聽Shore, with 40,000 square feet planned for a spot near Goldstream Avenue and Peatt Road, and as much as 140,000 square feet being considered for a six-storey building as part of Crombie REIT鈥檚 Belmont development.
鈥淭he province has given me the indication they will move out to the West Shore. They know 20 per聽cent of the government workforce lives on the West Shore and they are hearing from their employees that the commute stinks,鈥� Spark said. 鈥淸The government] has intimated to me it could put 40,000 to 50,000 square feet of offices out there over the next few years.鈥�
